An important problem in the modern world is the handling, treatment, and prevention of greenhouse gas emissions, such as carbon dioxide, which occur as the byproduct of many manufacturing processes. One technique that attempts to reduce greenhouse gas emissions is known as the Kyoto Protocol, under which participating countries set quotas or limits on the amount of greenhouse gases that those countries can emit into the environment. The governments of the countries, in turn, set quotas on the emissions of businesses that operate with their countries, e.g., in the form of carbon credits.
One carbon credit gives its owner the right to emit one unit (e.g., one tonne or metric ton) of carbon dioxide. Businesses that emit carbon dioxide in an amount that exceeds their allotted carbon credits must buy additional carbon credits for their excess emissions, while businesses that are below their quotas can sell their remaining credits. By allowing carbon credits to be bought and sold on an open market, a business for which reducing its emissions would be expensive or prohibitive can pay another business to make the reduction. This reduces the quota's impact on the business, while still allowing a country to keep its emissions under its quota. Thus, carbon credits are a tradable permit scheme that assigns carbon dioxide gas emissions a monetary value.
Businesses naturally prefer to minimize their total costs related to emissions, but determining how to do so is a difficult problem because both buying carbon credits and taking steps to reduce emissions have associated costs, and these costs can vary. For example, a business may have many organizational units, such as departments, that emit carbon dioxide as a part of their regular processes, either directly or indirectly, and the emission rates may vary between departments. As an example, an accounting department may have a low emission rate of carbon dioxide while a department that generates electricity may have a much higher emission rate. Also, the revenue lost or the increased costs that result from actions taken to decrease emissions may vary between departments.
Thus, a technique is needed for planning emissions reductions and carbon credits trading, in order to reduce the revenue loss or cost. Although the aforementioned problems have been described in the context of carbon credits and carbon dioxide, they could also apply to other waste byproducts, such as waste paper, scrap metals, methane, nitrous oxide, hydro fluorocarbons (HFCs), or any other waste items. Further, although the aforementioned problems have been described in the context of the Kyoto Protocol, they apply equally to any initiative that uses waste credits, such as the European Union Emissions Trading Scheme, and the United Nations Clean Development Mechanism.